Honda is estimating a 20% jump in two-wheeler sales this fiscal

The company is hoping to banish the long waiting period for its flagship scooter Activa

PTI

May 09, 2016, 08:38 IST

Two-wheeler major Honda Motorcycle and Scooter India has set a target of over 20% sales growth this fiscal as it hopes to banish the long waiting period for its flagship Activa scooter with the commissioning of the second line at its Gujarat facility.

"We hope to sell over 20 per cent more units this year. The second assembly line in Gujarat, with a capacity of 0.6 million by the end of this quarter, should help us end the near six-month waiting for the Activa now.

"We hope from the Diwali season one can drive away an Activa over the counter," the company's senior vice-president for sales and marketing Yadvinder Singh Guleria told PTI.

The Japanese company got off to a stellar start this fiscal, with April sales zooming 26.51% to 4,31,011 units, while rival Hero MotoCorp, which saw sales falling in 2015-16, witnessed a 15% spurt in sales to 6,12,739 units.

Third-placed Bajaj saw volume falling 2% to 3,30,109 units.

For the full fiscal 2015-16, as per SIAM data, while two-wheeler sales inched down 0.24% to 1,07,00,466 units, Honda sales rose to 44,83,459 units from 44,52,005 units, out of which domestic sales stood at 42,83,345 units, up from 42,63,746 units earlier.

"For the first time, we will be able to cross the 5 million sales mark this year," Guleria said, adding that the 1.2 million scooters-only Gujarat plant will help in reaching the target.

With the second line in Gujarat going on-stream, Honda's total capacity will touch 5.8 million from the present 4.6 million from its four plants.

"FY17 is going to be our most definitive year here. Our priorities will be strengthening our connect with the youth, make all our models BS-IV compliant at the earliest while continue to aggressively make inroads into rural markets, which now contributes around 35 per cent of total sales," Guleria said.

Honda opened the 6-lakh unit first line in Gujarat ahead of schedule in February and a similar capacity second line will be on-stream next month, Guleria said.

The Japanese auto major had a whopping 56 per cent share of the scooters market in 2015-16 and expects it rise further with more supplies from the Gujarat plant.

The Rs 1,100-crore plant at Vithalapur near Ahmedabad is the world's largest scooter factory. Since its entry, Honda has invested over Rs 7,800 crore and employs around 20,000 people, including the 3,000 people at the Gujarat plant.

Honda began independent operations (after split with Hero) in 2001 with a 1.65 million units plant at Manesar in Haryana.

In 2011, it launched the second plant at Tapukara in Rajasthan with 1.2 million capacity. It opened the third plant at Narsapura in Karnataka in 2013 with 1.8 million units, making it Honda's largest two-wheeler plant in the world.

Honda India President and Chief Executive Keita Muramatsu had told PTI earlier that by end 2016, India will be the largest market for Honda globally. Currently, with 4.65 million units, Indonesia is the largest market, while India was worth 4.60 million units in 2015.

The two-wheeler market is on course to touch the 20 million mark by 2020 from 16 million in FY15, but the industry is worried about the new emission and safety norms.

Muramatsu said scooters will continue to be the growth driver for the company, though bikes' volume should also improve as the company will be producing more bikes at the Rajasthan plant.

He said for Honda, the volume will be mostly driven by Activa in the near future.

A recent research report by the Swiss brokerage Credit Suisse had said scooters will continue to drive two-wheeler sales in the country till FY20, when its market share will jump to 40%.

The report had also said that Honda will drive the scooters market, where it is already the leader with over 56% market share.

When asked how the newest launch -- the India-specific Navi (priced at Rs 39,500) -- is doing, Guleria said the response has been overwhelming, with over 2,000 bookings from four cities in two weeks since the launch.

Honda has doubled its dealerships in the past two years from 1,950 outlets in FY13 to 3,750 outlets in FY15 and 4,300 outlets by March, adding over 800 new touch-points in 2015-16.